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Monday, August 15, 2022

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How crappy is our economy?

We find out this morning as we get our Q4 GDP Revision but don't worry, I already have the results (preliminary) and I thought it would be fun to post these up ahead of the actual so don't look if you want to be surprised later:

Contribution to Percent Change In Real GDP

Contribution to Percent Change In Real GDP
             
             

 

Q4-07

Q3-07

Q2-07

Q1-07

Q4-06

2007

             
Gross domestic product 0.60 4.90 3.80 0.60 2.10 2.20
Personal Consumption Expenditures 1.37 2.01 1.00 2.56 2.68 2.01
  Durable Goods 0.32 0.35 0.14 0.67 0.30 0.37
  Nondurable Goods 0.38 0.46 -0.10 0.61 0.86 0.49
  Services 0.67 1.20 0.96 1.28 1.52 1.15
Domestic Investment -1.64 0.77 0.71 -1.36 -2.50 -0.77
  Fixed Investment -0.39 -0.11 0.49 -0.70 -1.19 -0.47
    Nonresidential 0.79 0.96 1.12 0.22 -0.15 0.50
Exports 0.46 2.10 0.85 0.13 1.51 0.89
Imports -0.06 -0.72 0.47 -0.63 -0.26 -0.33
Government Consumption Expenditures 0.50 0.74 0.79 -0.09 0.66 0.40
  Federal 0.02 0.50 0.41 -0.46 0.50 0.12
    National defense -0.03 0.47 0.39 -0.54 0.74 0.13
    Nondefense 0.05 0.03 0.02 0.08 -0.24 -0.01
  State and local 0.49 0.24 0.37 0.36 0.16 0.28
             

 

So we're going to blame personal consumption for the decline, even though personal consumption was, in fact lower in Q2-07 by 30%.  In fact, our total GDP was just 0.6% in Q1-07 and, surprisingly, we're still alive.  In fact, the rest of '07 gave us quite a rally!   Unless we get a downside surprise that's really out of whack, we can consider a sell-off to be a possible overreaction but, like Q1, it's a trough in defense spending that knocks down the GDP.  Notice also the predicted low export number, that has our best chance of being an upside surprise.

Another surprise that has been ruined for us is the result of the 2008 election.  According to The Onion, which has a lot of good videos, Diebold accidentally leaked the planned results of the November election and it turns out McCain will win with 48% of the vote…  Don't laugh, that one may be true!  I love the guy they interview who says "I don't even know if I can enjoy the sham election now that I know who's going to win."  According the their apologetic Diebold Spokesman:  "This country is based on the fantasy that the government is the voice of the people and going through the motions of voting and keeping the kingmaker's dealings secret is central to our culture." 

In other shenanigan news, Cramer is on the attack regarding the SIRI/XMSR merger and devoted an entire segment of Mad Money to it the other day.

We had a conversation in member chat the other day about how shockingly cheap it was to bribe a Congressman and Cramer is claiming that the National Association of Broadcasters bought the votes of Gener Green (D-TX) for $16,000, Louise Slaugher (D-NY) who apparently can be had for just $1,000, John Spratt (D-SC) for $8,000, Roy Blunt (R-MO and minority whip) for $5,000 and Tom Cole (R-AZ) for $3,500.  Cramer has vowed to keep digging into these and other representatives until they explain why they are blocking this deal, which has had 4 days of Congressional hearings in over a year – we invade people with far less discussion than this!

Speaking of countries we invade – Congratulations to Iraq, who's Dinar has gained 40% against the dollar in the past 3 years.  That's right, our economy is rapidly losing ground to a war zone!  I especially love the line in the article that says: "Inflation has been brought under control, thanks to the tightening of monetary policy and the appreciation of the dinar-along with the maintenance of fiscal discipline and measures to reduce fuel shortages."  Kind of makes you want to cry doesn't it?

We talked about China's measures to reign in growth last night and the Hang Seng still managed to gain 107 points this morning, which is fairly subdued for that index.  Japan gave back 105 points and fell back below 14,000 as the rising Yen spooked people out of exporters but it's a minor pullback off 7-week highs.  Industrial output was down 2% in Japan, 1.4% lower than expected.  We will probably be lucky to get another shot at TM for $110 and I'm going to start an entry today on the Jan $110s, hopefully for $12.50, which was yesterday's low.  The March $115s were selling for as much as $3 yesterday so if we time this right we can give ourselves a very nice spread.

Europe is trading down about a point despite a 22% increase in net profit from RBS (no wonder they can afford all those ads) and a $4Bn merger involving BTI, who posted a 12% rise in profits for Q4.  Miners sold off on profit taking and AA is being taken to court by a rival in Bahrain who is accusing the company of: "A 15-year conspiracy involving overcharging, fraud and bribery."  A suit in federal court in Pittsburgh by Aluminum Bahrain BSC alleged that Alcoa steered payments for an aluminum precursor ingredient to a group of tiny companies abroad, in order to pay kickbacks to a Bahraini "senior government official."

Oil stalled again at $100 on yet another inventory build with gasoline supplies at the highest level in 14 years so the phones at Rent-A-Rebel must have been ringing off the hook and they are indeed getting good at this as they timed this morning's attack on an oil terminal right for the NYMEX open at 8:30, saving oil from slipping below $98 in morning trading.  Unlike previous attacks, this one only took out a very small 50,000 barrels a day because, at $100 a barrel, nobody would agree to take a bigger cut at last Friday's poker game.

8:30 Update:  The actual GDP numbers are in and, surprise, they are the same.  The market turned sharply down on the news as I suppose they were rooting for the Government to have no clue as to how to measure the Jan 30th readings I posted above as if somehow and upward revision would have been better than accuracy.  As is now becoming my theme for the month – IT'S ALREADY PRICED IN!

What's not priced in is Super Banker, Hank Paulson's (pictured here in his office) who is spearheading the White House line as: "The Bush administration is hardening its opposition to the chorus of Democrats, bankers, economists and consumer advocates calling for a big-money government rescue program for struggling homeowners."  Mr. Paulson, citing estimates that as many as two million Americans could lose their homes to foreclosure this year, predicted that the administration's market-based approach will be enough to keep the situation under control.

In other words, his friends haven't scooped up all the good properties at auction yet so any meaningful relief will have to wait until all 2M families are homeless at which time the governement will come in and bail out the banks, who will have already taken the write-offs on the homes and will be able to book them as 2009 profits so they can tell everyone what sharp businesspeople they are again.

Jobless claims were up this morning, rising 19,000 to 373,000 with 400,000 considered recessionary and the prior week was revised up 5,000 as well.  FRE had awful earnings and we'll be lucky to get out of that half covered position alive as they don't seem to expect a real turn around this year or next.  Sears is having a half-price sale and it's their stock!  Earnings were also down 47% on falling margins and this is another one I want to bottom fish in the low $90s as $12.5Bn is a very fair price for 5,000 retail locations that many towns in this country are built around.

Today is attack the market day as the bears do their best to wriggle out of their shorts after the last 5 days of gains caught them by surprise.  Aside from PIM(P)CO getting a prime slot on CNBC this morning, the guest list is filled with attack bears so once again I will be thrilled to simply hold Tuesday's (and last Thursday's) open at 12,500 – anything better than that is progress.

Important note:  With CVX added to the Dow, the index is now very succeptible to sell-offs in the energy sector, this is something to be aware of as it is more likely than ever that an oil sell-off will irrationally hurt the industrials and give us false panics.

 

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Cap, that is one of two things Bush did that were worthwhile. The other was the immigration stance, not that that led to anything since he did it so late that he had no pull to get it done, but at least I agreed with his position.

opt
i agree, get a nikon. excellent choices in the nikon D series, lots to choose from. i also have a nikon coolpix p60, which is so small and light and fits in a pocket. not a serious camera, but i love it for it’s portability. i always have it on me. i only take the more serious camera out occassionally.

TED presentations were very interesting.

FRE –

UBS sez fair market value is 50 cents.

CSFB says fair book value is 46 cents. reported book value is 19.38.

I imagine they are short FRE.

just passing this on …

RRM / Benz – That’s a very debatable comparison. I believe the germans are unbelievably brilliant in their engineering.

Mercedes was the first with seat belts, Air bags, ABS, and the list goes on. I think there’s very little premium in their vehicles given the technology and development.

Realistically, you should just try all the cameras. Whatever you’re happy with, keep it.

I’ll summarize in another way that I’ve found, based on experience.

Lens
Leica > Canon > Nikon

Performance
Leica > Nikon > Canon

Image Quality
Canon > Leica Nikon

Build Quality
Leica > *insert gap here* > Canon Nikon.

Bang for Buck
Nikon (Cheapest) > Canon > Leica (Most Expensive)

Functionality
Canon > Leica > Nikon

The wheel on canon’s SLRs come in very handy.

Personally I think Canon’s have really nice saturation in their photos, and Nikons come out a bit blue for my taste… just my two cents.

I just found this somewhere else … I thought it was pretty funny; hope you do too. And I don’t necessarily agree w/ all of them, but some were spot on, like #17. And please don’t flame me; just having fun !

Requirements of a good Democrat:

1. You have to be against capital punishment, but support abortion
on demand.

2. You have to believe that businesses create oppression and
governments create prosperity.

3. You have to believe that guns in the hands of law-abiding
Americans are more of a threat than U.S. Nuclear weapons technology
in the hands of Chinese and North Korean communists.

4. You have to believe that there was no art before Federal funding.

5. You have to believe that global temperatures are less affected
by cyclical documented changes in the earth’s climate and more
affected by soccer moms driving SUV’s.

6. You have to believe that gender roles are artificial but being
homosexual is natural.

7. You ha ve to believe that the AIDS virus is spread by a lack of
federal funding.

8. You have to believe that the same teacher who can’t teach
fourth graders how to read is somehow qualified to teach those same
kids about sex.

9. You have to believe that hunters don’t care about nature, but
loony activists who have never been outside of San Francisco do.

10. You have to believe that self-esteem is more important than
actually doing something to earn it.

11. You have to believe that Mel Gibson spent $25 million of his
own money to make “The Passion of the Christ” for financial gain only.

12. You have to believe the NRA is bad because it supports certain
parts of the Constitution, while the ACLU is good because it supports
certain parts of the Constitution.

13. You have to believe that taxes are too low, but ATM fees are
too high.

14. You have to believe that Margaret Sanger and Gloria Steinem
are more important t o American history than Thomas Jefferson, Thomas
Edison, and A.G. Bell.

15. You have to believe that standardized tests are racist, but
racial quotas and set-asides are not.

16. You have to believe that Hillary Clinton is normal and is a
very nice person.

17. You have to believe that the only reason socialism hasn’t
worked anywhere it’s been tried is because the right people haven’t
been in charge.

18. You have to believe conservatives telling the truth belong in
jail, but a liar and a sex offender belonged in the White House.

19. You have to believe that homosexual parades displaying drag,
transvestites, and bestiality should be constitutionally protected,
and manger scenes at Christmas should be illegal.

20. You have to believe that illegal Democrat Party funding by the
Chinese Government is somehow in the best interest to the United
States.

21. You have to believe that this message is a part of a vast,
right wing conspiracy.

22. You have to believe that it’s okay to give Federal workers the
day off on Christmas Day but it’s not okay to say “Merry Christmas.

23. You have to believe that there is a serious lack of Right Wing comedic writers.

foto, Beth,
Yes – dividend & Deep in the money were the problem + mismanagement of the calls.

lol that was pretty good cap.

i do good cut & paste DM !

g’nite all.

Good Morning everyone.

UK flat an hour into trading. $ a little stronger against the £

US futures based on Frankfurt also flat.

Dells results seem to have puzzled the after hours traders. (Down, Up, Down, Flat)

Asia Markets : Friday, February 29, 2008

(The following is from WSJ; please cross check with other sources to confirm.)

Japan*

13603.02
-322.49
-2.32%

Hong Kong*

24331.67
-260.02
-1.06%

DJ Shanghai*

491.76
5.89
1.21%

S.Korea*

1711.62
-24.55
-1.41%

India*

17488.13
-336.35
-1.89%


Baltic Dry Index (BDI)
+33 7332

* at close
Sources: Dow Jones, Reuters

Morning DB

Good Morning Ramana.

Mixed bag in Asia I see. Should be an interesting day in the US. Not many Feb 29th to compare with 🙂

Oil surpasses $103 for first time
Oil prices surpassed $103 a barrel for the first time Friday as persistent weakness in the U.S. dollar and the prospect of lower interest rates attracted fresh money to the oil market.

Investors chose to see the comments as confirmation of their beliefs that the Fed will continue cutting interest rates to try to shore up the economy.
Lower U.S. interest rates tends to weaken the dollar, and crude futures offer a hedge against a falling dollar. “Due to the weakening dollar and the rising fear of inflation, investors have put money into commodities, oil included,” said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. “Commodities, as tangible assets, do not face as much inflationary threat as opposed to holding a currency,” Shum said. “Even though the value of money is changing, the asset continues to have an intrinsic value.”

Light, sweet crude for April delivery jumped to a new trading record of $103.05 a barrel in Asian electronic trading on the New York Mercantile Exchange before slipping back to $102.79 a barrel, up 20 cents, midafternoon in Singapore.

On Thursday, the contract jumped $2.95 to settle at a record $102.59 a barrel.

Shum warned that a price bubble was emerging in the crude futures market as investors ignored market fundamentals that have shown continuous increases in U.S. crude supply while several recent forecasters have lowered oil demand growth predictions for this year due to the slowing economy.

The Japanese government on Friday urged the oil cartel OPEC to increase output to help ease record prices.

“The high crude prices are gradually damaging the global economy. This will damage the economies of oil-producing countries,” Minister of Economy, Trade and Industry Akira Amari said. The Organization of Petroleum Exporting Countries holds its next policy meeting on March 5. It is likely to decide to keep current production levels unchanged, or even cut production, according to reported comments by OPEC President Chakib Khelil. Khelil noted that oil inventories were growing, and that the recent rally in oil prices has been driven by the U.S. dollar’s weakness and speculative trades amid geopolitical risks.

In other Nymex trading, heating oil rose 0.82 cent to $2.8538 a gallon while natural gas futures added 0.1 cent to $9.444 per 1,000 cubic feet.

In London, Brent crude futures rose 9 cents to $100.99 a barrel on the ICE Futures exchange.

Gold hits record near 980 usd/oz as dollar slumps; platinum jumps
Gold hit a record near 980 usd on a weak dollar, inflation fears, keen investor interest for commodities and the perception that bullion acts as a hedge against weak equity markets.

Analysts reckon the key psychological 1,000 usd per ounce could be breached as soon as today as such factors are set to remain. Elsewhere across the whole commodities sector, raw materials were strong. Oil, for instance, was close to a record near 103 usd per barrel.

At 8.59 am, the precious metal was trading at 971.95 usd per ounce against 965.20 usd in late New York trade yesterday. This morning, gold rose to a record of 976.13 usd per ounce.

A weak dollar, which today remained close to record lows seen yesterday, encourages US investors to turn to gold because the metal is known for holding its value. It also prompts foreign investors to buy the dollar-denominated metal, because the cost is not as high for those with stronger currencies.

Higher oil prices, meanwhile, spur investment into the metal as an inflation hedge.

Meanwhile, platinum bounced back impressively and was at 2,155 against 2,140 usd an ounce in late New York trades yesterday, The metal, used extensively in catalysts and jewellery manufacturing, had dropped to 2,085 yesterday on profit taking.

Platinum has risen sharply since the end of January, when state power utility Eskom caused a five-day closedown of mines after warning it could not guarantee electricity supply unless usage was cut. Eskom later told miners that electricity supply would be kept at only 90 pct of usual requirements until 2012.

Meanwhile, platinum’s sister metal palladium rose to 575 usd this morning against 574 usd in late New York trades yesterday. Silver was up at 19.73 usd from 19.62 usd per ounce yesterday.
Euro keeps climbing against dollar, hits US$1.5238
The euro continued its rapid climb to new highs against the dollar on Friday, hitting US$1.5238 in early European trading.

The dollar has been plagued by uncertainty about the course of the U.S. economy even after U.S. Federal Reserve Bank chief Ben Bernanke said Thursday that the American economy was not “anywhere near” the dangerous situation of the 1970s.

The euro’s peak Friday was above the previous all-time high of US$1.5229 that it reached on Thursday.
In midmorning trading, the euro subsided slightly to US$1.5203 from the US$1.5215 it bought in late New York trading Thursday.
“The dollar looks set to finish the month with yet more downside pressure being heaped upon it,” said Gary Thomson of CMC Markets in London.
The British pound fell to US$1.9871 from US$1.9926. The dollar dipped to 104.39 Japanese yen from 105.36 yen in New York the night before.

Lower interest rates can jump-start a nation’s economy, but can weigh on its currency as traders transfer funds to countries where they can earn higher returns.

Look at Gold and dollar and Oil!

A interesting story this morning . Advertisers not all doom and gloom…

http://www.marketwatch.com/news/story/wpp-doesnt-share-gloom-profit/story.aspx?guid=%7B53962081%2D0C46%2D4D7E%2DAAB1%2D404DDC994315%7D

… they would see a slowdown before most surely ? And Dells results really did confuse, yet most pieces this morning are negative. There was an interesting take on CNBCs website , Mr Goldman seems well confused ….

http://www.cnbc.com/id/23390886

dude!!!

Financial Firms Face $600 Billion of Losses, UBS Says (Update1)

By Abigail Moses

Feb. 29 (Bloomberg) — Financial firms are likely to face at least $600 billion of losses as the crisis triggered by the collapse of subprime mortgages batters banks, brokers and insurers, UBS AG analysts said in a report today.

Financial institutions have disclosed more than $160 billion of writedowns and credit losses. Banks and brokers stand to lose $350 billion, according to estimates from UBS’s global banking team.

“We have to recognize the risk that the economy will suffer more damage than what consensus suggests,” wrote Geraud Charpin, head of European credit strategy at UBS in London. “All the investment schemes that have been built on the basis of a strong and resilient economic backdrop have to be unwound/ scaled down.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=auI8qPM3t6uc&refer=home

Phil,
EK in 25 KP:
DD @ .1 still OK?
Thanks!

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